Do you have a dispute with your bank? Not everyone knows it, but there is a simple, cheap and faster way than ordinary justice to solve it: contact theBanking Financial Arbitrator (ABF), established 9 years ago by law by the Bank of Italy but independent in its judgments. Just send the online appeal with all the documentation of the dispute to the ABF, spend 20 euros in all and wait for the response within a few months, without the need for lawyers. Started a little quietly, the ABF is experiencing a success that has gone beyond expectations: more than 30 appeals in 2017 with an increase of 42% compared to the previous year, above all due to the boom in disputes over salary assignments salary or pension, with a favorable outcome for customers in 77% of cases. A boom that displaced the Referee himself, forcing him to run for cover and strengthen all his structures: But why are Italians discovering the ABF, where does their trust come from – a rare commodity these days – and what is there behind the rain of appeals on the assignment of the fifth? This is explained in this interview with FIRSTonline by Magda Bianco, Head of the Customer Protection and Anti-Money Laundering Service of the Bank of Italy, who recently presented the Annual Report on the ABF's activities in 2017.
In the Annual Report on the 2017 activity of the Financial Banking Arbitrator (ABF) the fact stands out that last year the appeals of bank customers to resolve their disputes with banks out-of-court and as an alternative to ordinary justice grew by 42% over the previous year, reaching over 30: did you expect a boom of this size and what is behind the growing trust in the ABF?
“This growth is indeed beyond our expectations. How to explain it? We think it is linked on the one hand to critical issues in some markets, on the other hand to trust in the ABF as an impartial dispute resolution tool. This trust probably depends above all on the quality of the decisions of the Arbitrator: the seven boards that decide today are made up of teachers, ex-magistrates, professionals (indicated both by the Bank of Italy and by intermediaries and consumers), and are all specialists in matters dealt with by the ABF; they are assisted by the technical secretariats which carry out important preliminary work. But we think it also depends on the uniformity of the guidelines expressed by the 7 colleges and on the compliance rate of the intermediaries (even if the decisions are not binding, 99 percent of those that see them lose is respected by banks and intermediaries)».
There are those who say that the Financial Banking Arbitrator risks being a victim of his success and that the growth of appeals ends up lengthening the times of his pronouncements which already now, despite being in line with Europe, require an average of 261 days: is it a real danger or not and how do you plan to deal with it?
«The lengthy times required to obtain a ruling depend exclusively on the backlog that has accumulated due to the very strong growth of recent years. We are responding on several fronts: at the end of 2016 we opened 4 new colleges and technical secretariats (there were 3 up to the end of 2016). A portal has been active since February 2018 for making appeals online and following their evolution. We have streamlined and rationalized internal organization with further productivity gains: board decisions increased by 70%. The revision of the regulatory provisions governing the ABF (which will be in consultation in the next few days) should ensure further scope for simplifications. But we also hope that banks and other intermediaries will increasingly implement the ABF guidelines during the complaint phase or at least settle the dispute before it is brought to a decision".
How do you explain the fact that about 70% of the appeals concern disputes relating to the transfer of a fifth of a pension or salary? Does it depend on the opacity of the banks and intermediaries who manage salary-backed loans or on the weakness of customers who, in this case, have obvious difficulties and somehow recall the people of subprime mortgages?
«The transfer of one fifth of the salary or pension represents a very significant portion of the dispute before the ABF in recent years. These are mostly disputes concerning rather dated contracts, which were characterized by high opacity, especially as regards the component of fixed costs charged to the customer, which cannot be recovered when the latter pays off the loan early to renew it. Only ex-post did customers, sometimes in conditions of economic difficulty, realize the real costs of the operations. These critical issues, largely highlighted by the appeals to the ABF, led us among other things last March to issue the "Supervisory Guidelines" on the matter, to lead the market towards better practices».
How does the Financial Banking Arbitrator stand in relation to civil justice? Is what you do a substitute or a complementary work?
“I would say it fulfills both roles. It is a substitute for ordinary justice because in many cases we are dealing with disputes of a very limited amount: it is a request for justice that probably would not go to court due to the costs that this would entail. But it is also complementary, because it joins you in producing guidelines that are often taken up by the judges themselves. We remind you that in any case the appeal to the ABF is a condition of admissibility for that before the ordinary judge (even if, from our investigations into the banks, only 0,6 percent of the decisions of the ABF are then brought to trial)" .
What effects does the activity of the Financial Banking Arbitrator have on the credit market and on the financial market?
«We think it plays a positive role: together with the other protection instruments (in particular the supervision of transparency and fairness) it helps to guide the behavior of banks and other intermediaries in the direction of ever greater transparency and substantial fairness. In this way, consumer confidence and their willingness to operate on these markets increase. It is a role that ADRs (alternative dispute resolution, alternative dispute resolution tools to ordinary justice) are starting to play in the main countries: through the management of disputes, they ensure protection for the "weaker" part of the contractual relationship and restore trust in the banking and financial markets.
You don't believe that the activity of the Financial Banking Arbitrator is all the more effective the more he also knows how to trigger a virtuous circuit of financial education: from this point of view, what is the balance sheet of the first years of activity of the ABF?
"Certainly. It is a role that I believe it plays both towards consumers (the publication of all the rulings means that it is possible to know the guidelines before contacting the ABF), and towards intermediaries, who have corrected their behavior over time" .
What developments will the Financial Banking Arbitrator have in the next few years and what do you plan to do to make access for applicants ever easier and responses ever faster?
«The ABF will continue to work, hopefully with slightly lower growth rates than in recent years (in the first months of 2018 growth actually slowed down a lot, above all due to the reduction in salary-backed loans appeals) . To simplify access we have created a portal, which registers an increasing number of activations; we will further simplify the organization where possible. In addition to having expanded the colleges at the end of 2016, we will further strengthen the technical secretariats that instruct work for the colleges. Thanks to the action of the supervision, synergistic with that of the ABF, we hope to obtain an increasingly rapid adhesion of the intermediaries and therefore to speed up the responses of the ABF as well».
Also read: "Financial Banking Arbitrator: boom in appeals, here's how it works"
